US: Tobacco Companies Are Collectively 'Falling in Love' With E-cigarettes — Transformation Is Under

According to reports from Chinese electronic cigarette news, do you remember Frank Underwood, the main character from the hit American drama "House of Cards"? Do you recall his charming expression while smoking an e-cigarette? This illustrates the powerful celebrity effect, which has pushed tobacco companies onto the path of e-cigarettes. Surveys indicate that the magical and wonderful e-cigarette has been scratching the minds of traditional tobacco company managers for a long time, but due to the limited capacity of the overall tobacco market, it has remained a supporting role in the market. With the continuous increase in tax revenue from the U.S. government and the depressed economic environment, sales in the traditional cigarette market have significantly declined. A report from Wells Fargo in 2013 shows that this downward trend is accelerating. The report indicates that e-cigarettes are being accepted by more consumers in the U.S., some of whom are transitioning from traditional consumers, while others are attracted by intensive advertising and convenient sales channels. To this end, the bank conducted a sample survey of 45,000 convenience stores across the U.S. All surveyed tobacco retailers and wholesalers are now selling e-cigarette products, with 98% of respondents indicating that the e-cigarette market has been continuously expanding in the first quarter of 2013, with an average growth rate of 30%. Such astonishing growth may be due to a small base. However, Wells Fargo inferred that e-cigarette sales in the U.S. exceeded $1 billion in 2013. The report also indicates that a turning point has emerged in the market, where repeat purchases have begun to exceed trial purchases, indicating that e-cigarette products are starting to have stable customers. Taking the U.S. market as an example, several major tobacco companies have recently become more frequent in their engagement with e-cigarettes. For instance, the third-ranked Lorillard Company acquired NJOY to gain the leading market brand Blu; Reynolds America plans to launch its Vuse brand e-cigarettes nationwide; and even Altria Group and Philip Morris International, which had previously taken a wait-and-see attitude, have now decided to work together to win the market access license for next-generation products. In April, Altria Group completed the acquisition of e-cigarette manufacturer GreenSmoke for $110 million in cash, while Lorillard Company acquired NJOY to gain the leading market brand Blu; Reynolds America plans to launch its Vuse brand e-cigarettes nationwide; and even Altria Group and Philip Morris International, which had previously taken a wait-and-see attitude, have now decided to work together to win the market access license for next-generation products. In April, Altria Group completed the acquisition of e-cigarette manufacturer GreenSmoke for $110 million in cash. As a new industry player favored by tobacco giants, GreenSmoke has focused on vapor-type e-cigarettes. This type of product is currently the mainstream in the smokeless tobacco product market, but changes may occur in the future. Some companies are unwilling to work within the existing framework and boldly explore new paths in research and development. Philip Morris International, which was spun off from Altria in 2008, is currently "betting" on a smokeless product production line that is still in the research and development stage. This product is said to heat real tobacco, releasing flavor without burning nicotine. It is referred to by Philip Morris International as a "harm-reduction" product. This "harm-reduction" product contains the main components we currently know from cigarettes, primarily real tobacco leaves, but manufacturers will use technical means to eliminate some harmful components found in regular cigarettes. Philip Morris International CEO André Calantzopoulos mentioned, "Only products based on real tobacco can provide a more authentic smoking experience." Calantzopoulos described these products as "heated but not burned": heating the tobacco leaves to a temperature sufficient to vaporize flavor and nicotine, but not to the extent of producing smoke. Philip Morris International has chosen not to follow the existing e-cigarette model in the market, opting instead to develop these new products because, in principle, they can provide a smoking experience more similar to that of regular cigarettes. He believes that compared to other e-cigarette products, the new products being developed by Philip Morris International have market potential. Philip Morris International has announced plans to invest 500 million euros to establish its first product factory in EU countries and to co-build an experimental factory in Italy with other companies. By 2016, this factory, along with the experimental factory in Italy, will have a total of 30 billion e-cigarettes and employ around 600 staff. Philip Morris International has established three research and development platforms for this purpose: Platform 1 and Platform 2 are responsible for the "harm-reduction" product projects, while Platform 3 continues to follow up on vapor-type e-cigarettes. Calantzopoulos stated that although e-cigarettes are currently a more successful market variety, "we believe that Platforms 1 and 2 will have greater potential and will be accepted by consumers more quickly." However, so far, regular vapor-type e-cigarettes remain the primary choice for tobacco companies. As Wells Fargo global tobacco analyst Bonnie Herzog puts it: "We agree and believe that Altria's acquisition of GreenSmoke will bring strong sales power, retail partnerships, and marketing strategy expertise to the latter, rapidly expanding its sales channels. From a regulatory perspective, the significance of this acquisition lies in the fact that it may remind the U.S. Food and Drug Administration that as e-cigarettes increasingly become one of the mainstream products in the tobacco market, it is time to crack the whip."#p#分页标题#e#